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Meeting Consumer Needs in a Managed Care Environment

1. Introduction

Reform and Managed Care

Throughout the 1980s and 1990s the health sector in New Zealand experienced a process of reform underpinned by policy developments designed to create a competitive model of health delivery. A new functional role for health providers as business like entities emerged, with health becoming redefined as part of a government initiated strategic economic policy direction designed, in part, to address identified fiscal pressures on the health system.

This process of reform was characterised by two fundamental principles:

• firstly that health is a service like any other and we should therefore identify and understand the cost of that service.
• secondly that efficiencies can only be attained through creating, as much as possible, a competitive marketplace where contracts are established and bidding and comparisons occur for those services.

We now have a market place environment where the right to provide health care (a commodity/product) is competed for, wherever possible, by a range of private and public providers. The response of the Health sector to these challenges has been to explore alternate methods of health delivery (e.g. managed care), in order to better meet the demands of this competitive marketplace. One such initiative was the creation of Independent Practice Associations (IPAs) where individual doctors and practices combined to achieve efficiencies and 'manage populations' .

The New Zealand Health Sector

On 1 July 1993 changes to the structure of the health sector in New Zealand were implemented with the enactment of the Health and Disability Services Act. As with other reforms, this legislation was designed primarily to address fiscal pressures on the health system. At the core of the changes was the establishment of a purchaser/provider split and the introduction of commercial principles into the management of Crown-owned providers. It was considered that restructuring hospitals into independent and separate business units, which would compete against other providers of care from the private and voluntary sectors, would provide the necessary tension and incentives to enhance their performance through the creation of competition in the provider market.

Initially there were four regionally based purchasing authorities known as "Regional Health Authorities" which acted as the Government's purchasing agency for publicly funded health and disability services for the people in their regions. On the 1st of January 1998 these four Regional Health Authorities merged into one national body called the Health Funding Authority. The major providers, operating mainly in the secondary/tertiary sector, were established as companies under the Companies Act 1993, owned by the Crown with Ministers of Finance and Health as shareholders. The Ministers appointed directors to the Boards of these companies whose principle objective was to provide health and disability services, and enter purchase agreements with the Health Funding Authority. They are required to operate successful and efficient businesses.

This business model remains intact. Since 1993 the Commerce Act 1986 has applied to all areas of the health sector and to everyone involved in the provision of health or disability services. This Act views all medical practices as business entities and prohibits a range of anti-competitive activities it terms as 'restrictive trade practices' . These include price fixing (s30) and arrangements between parties that substantially lessen competition (s27). The health reforms were about creating a 'market' among providers through the (now discontinued) introduction of contestable funding, and the prohibitions outlined in the Commerce Act were designed to protect and promote competition in these 'health markets' . Perhaps we should be asking whether the creation of this market-place has been successful in producing greater effectiveness, quality and availability of services to New Zealand health consumers.

Having said this, I also concede that the model has delivered a lot of 's ense' into the sector which may not otherwise have occurred. Price comparisons between regional and district monopolies are now able to be made (though greater public transparency still needs to occur), and many secondary services have actively worked with community groups to ensure the population needs are addressed at a primary level, to stop the inflow into secondary Accident & Emergency Departments. While not "managed care" as defined in some American models, this process has been very effective at managing care to improve the health of the regional population.

2. The Concept of Managed Care

In New Zealand, the 1996 Ministry of Health Annual Report referred to the Advancing Health in New Zealand document which contained a discussion of what the Ministry hoped to achieve through the introduction of 'managed care' schemes. Although the language in the Policy Guidelines for Regional Health Authorities 1996/97 changed to 'co-ordinated care', it seems apparent that the Ministry regard them as comparable. Professor Lawrence Malcolm (Healthcare Review April 1996) defines managed care as 'a process by which, within an agreed budget for a registered population, comprehensive primary and secondary care services are provided and co-ordinated from a primary care level'. Perhaps we should ask - what about tertiary services? - will these remain the responsibility of the RHA's ?

At a generalist level, managed care could be seen as a moving towards better management of community involvement in care decision making. However the definitions of managed care are both varied and open to interpretation. At a New Zealand AIC 'Managed Care for Preferred Outcomes' conference in 1996 it was noted that 'attempting to introduce a new concept into health care such as managed care, creates many issues and concerns' . It is not my intention to explore the many and various definitions of managed care in this paper, as this would require a paper on its own. Suffice to say that we need to ensure we clearly define our terms in order to ensure our comparisons are correct.

In the United States the managed care environment is very different to New Zealand, where 85-90% of our health care continues to be funded through the State. Those who buy health insurance often do so to protect themselves from long waiting times for non-emergency services, or as an insurance policy for future unplanned financial need. The Ministry of Health Annual Report, (1996:1) stated "the Ministry has led significant initiatives in managed care- the Managed Care conference convened by the Ministry discussed primary and secondary integration, and the potential benefits and risks of managed care and budget holding".

As Commissioner, I share the Ministry's concern that any managed care/integrated care proposal should acknowledge the need to put people at the centre of service delivery. Managed Care should not be seen simply as a tool for cost containment where services are provided on the basis of financial risk involved. Rather it must be focused on strategies designed to improve the health of all New Zealanders in an effective and efficient manner.

Some of the early attempts involving IPAs did not necessarily meet this outcome. Costs were contained and savings went back into swept up computers and waiting rooms, rather than increased services as identified by the funder. Equity between regions and populations will not be achieved in this way. I find it interesting that in the 3 years that have passed since this report, there has been considerable debate and a number of studies, but not much has really changed in terms of introducing a workable managed care model of health delivery. The few attempts we have seen to introduce variants of managed care in areas such as pharmacy and general practice (Independent Practitioners Associations) have not been particularly successful in advancing the debate.

Cost containment or cost effectiveness do not, in themselves, produce better health outcomes or improve efficiency. Controlling expenditure may be an attractive hypothesis for funders to explore. The reality in my opinion is that in a single funder system such as New Zealand, a country characterised by a wide geographical population spread, it would appear extremely difficult to introduce models of managed care such as those we have seen developed in the United States. In order for there to be a better 'fit' with 'public health' requirements, the definitions of managed care would need to be expanded to include equitable financing of services, decision making involving the consumer and a seamless delivery of health care driven by public needs.

We must not forget that in New Zealand the consumers who often need services the most tend to be the most disempowered. They tend to be hidden, have few resources to state their views and often require delivery in an entirely different way. On a population based funding it tends to be more expensive to meet their health needs. Pacific Island populations for example have low health status, little representation and need locally delivered services to meet their needs. We are starting to see this occur through asthma, hepatitis and other services but our low immunisation rates are a simple reminder of how we are not yet effectively ensuring the public's care is managed.

In New Zealand there has been a traditional belief that health is a universal public good. ie. subject to public ownership and accountability. Therefore, my questions are:

• is it realistic for providers to be expected to co-operate and co-ordinate services within a commercially competitive Managed Care model?
• how can the "public good" be served when accountability and co-operation take second place to fiscal accountability?
• who would a managed care organisation be accountable to, and who would decide on the services which it offers?
• how can we ensure equitable funding for the traditionally underfunded areas such as mental health?
• inequity in resource allocation often results in decreased accountability to consumers - apart from the Code, how do we ensure increased accountability within a managed care scenario? - who is going to be accountable to whom and who decides on the services which will or will not be offered?
• How does public good health in a 'wellness' model of managed care fit into a public health sector focused on outputs and funded under a Public Finance Act?

It is interesting to note that one response to American models of Managed Care has been the formation of consumer right groups to protect patient's rights and advocate for protective legislation. In response to pressure from these consumer advocates, State and Federal legislation is being considered to guarantee consumers provider choice, and the right to be involved in treatment decisions. Thankfully, our situation in New Zealand is somewhat different.

3. The Code of Health and Disability Services Consumers' Rights

New Zealand has a unique place in the medico-legal world - no other country gives consumer rights the force of law. The Health and Disability Commissioner Act was enacted in October 1994 after being in the parliamentary process for a number of years. The Code of Health and Disability Services Consumers' Rights came into force on 1 July 1996 and is incorporated as regulation under the Act. The Act and the Code now ensure that health and disability consumer protection in New Zealand no longer depends on the changeable priorities of individual providers but is subject to a consistent, fair standard throughout the sector. As Commissioner, I am charged with the task of promoting and protecting consumer rights, and I am afforded wide jurisdiction and equally wide powers to fulfil this role.

The establishment of the Code of Rights was fundamental to achieving the purpose of the Act. The Code now covers rights in respect of the quality of services throughout the health and disability sector, but does not cover issues of purchasing or entitlement to any particular service. The Code is a tool to improve service quality. The health care or disability service provider which incorporates the principles of the Code of Rights into its code of practice, training and induction programmes can only improve its relationship with its clients, increase the effective utilisation of its service and reduce the chance of serious complaints.

The Act sets out a list of health care providers to whom the Code applies, which covers "any person or organisation providing or holding themselves out as providing a health care service to the public", whether that service is paid for or not. This includes all registered health professionals, and extends to alternative health providers. The Code brings a degree of accountability to practitioners who are beyond the medical mainstream - acupuncturists, naturopaths, homeopaths, health shops and rest homes, etc - professions which have been exposed to little regulation in the past. It has particular advantage for the elderly and disability service consumers who previously had little protection.

The definition of a disability services provider is even wider as it is not limited to those providing services to the public. A disability service provider "means any person who provides, or holds himself or herself or itself out as providing, disability services". Disability services include goods, services and facilities provided to people with disabilities for their care or support or to promote their independence. For example it extends to special education units, voluntary agencies and families providing support in the home to people with disabilities.

The Code confers ten basic rights on all users of health and disability support services. They are:

1. the right to be treated with respect

2. the right to freedom from discrimination, coercion, harassment, and exploitation

3. the right to dignity and independence

4. the right to services of an appropriate standard

5. the right to effective communication

6. the right to be fully informed

7. the right to make an informed choice and give informed consent

8. the right to support

9. rights in respect of teaching or research

10.the right to complain.

In addition to the ten rights, the Code also contains a clause (Clause 1) which requires providers to inform consumers of their rights and enable them to exercise those rights. However, the rights in the Code are not absolute - Clause 3 states that providers are not in breach of the Code if they can show they have taken 'reasonable actions in the circumstances to give effect to the rights, and comply with the duties' in the Code - a matter which must be decided on the particular facts of each case I consider.

It is important to remember that compliance with the Code is not an "all or nothing" matter. If circumstances are difficult, the obligation on the provider is still to take all reasonable steps to comply with the Code as much as possible in those circumstances. The Code does not override other legislation and nothing in the Code requires a provider to act in breach of any duty or obligation imposed by any enactment or prevents a provider doing an act authorised by any enactment.

4. Managed Care and the Code

Issues for Providers

For the purposes of this presentation my definition of managed care is a consumer focused one. From this perspective the prospect of a managed care/integrated care environment which creates health centres, developed and run by community groups of health providers may have serious implications in terms of the Code. Initiatives such as this highlight the need for closer working relationships and co-operation between providers. This sort of co-operation is a requirement under Right 4(5) of the Code, which states that every consumer has the right to co-operation among providers to ensure quality and continuity of services. But how do you achieve co-operation and co-ordination of services within a commercial competitive model of service delivery? How is co-ordination achieved for an individual in a model focused on population good health?

There may also be quality of care issues in terms of the Code, where more than one provider is involved in the management of a consumer's care and support, but no one provider can be identified who is responsible for the overall quality of care. The question of boundaries, and common agreement about where these boundaries lie, becomes significant for consumers to the extent that they impact on the overall quality of services consumers receive. If a managed care/integrated care model is to be introduced it is vital that clear lines of accountability and responsibility are established. Community schemes and involvement in care decisions should not be seen as allowing providers to stereotype the needs of consumers.

Efficiencies cannot be achieved at the cost of safety and quality of service. Over recent years I have heard many complaints relating to problems caused by lack of continuous care. Much of this discontinuity related to information which should have been passed on to the next service provider but was not. It does however raise some important issues:

• People moving from hospitals into the community are sometimes seen to 'fall between the cracks.' This usually means that the responsibility for the person's care has become unclear but, in many cases, 'the cracks' are really a lack of co-operation between various providers.
• Concerns about providers who have invoked 'the Privacy Act' to justify not passing necessary and permitted health information on to a caregiver, other health provider or supporting family member. There may be various reasons for this - extreme risk aversion, lack of staff or poor staff training, but there seems to be a general belief that you might be 'damned if you do', but can't be 'damned if you don't.'
• Under the Code of Rights you can be damned if you don't. Right 4(5) entitles consumers to co-operation between providers, and providers who invoke the Privacy Act to justify not co-operating with the passing of necessary information run the risk of being found in breach of Right 4(5).
• The Health Information Privacy Code, particularly in Rules 2 and 11, which relate to the source and disclosure of health information, contains a number of practical, common-sense provisions which enable caregivers to co-operate where necessary and in the individual's interest. For example, Rule 11(2)(b) allows disclosure if the 'health agency believes on reasonable grounds that it is not desirable or practicable to obtain authorisation from the individual concerned and: the information is disclosed by a registered health professional to the principal caregiver or a near relative of the individual concerned in accordance with recognised professional practice and the disclosure is not contrary to the express request of the individual?
• Also, it will often be a reasonable assumption that the passing of health information in the interests of continuity of care is one of the purposes for which the information was collected in the first place. In such situations disclosure is permitted under Rule 11(1)(c) of the Health Information Privacy Code and indeed required under section 22(F) of the Health Act.
• When the Code refers to 'co-operation between providers' it covers a wide range of services, not just health professionals. The Act refers to all classes of health professional, plus:

  Any other person who provides, or holds himself or herself or itself out as, providing, health services to the public or to any section of the public, whether or not any charge is made for the services.

  For a disability service provider the definition is even wider:

  "Disability services provider" means any person who provides, or holds himself or herself or itself out as providing, disability services:

• The definition of disability service provider does not require that services be provided to the public, and therefore family members in a care-giving situation are potentially included.

A managed care environment where providers are required to compete against each-other for the funding to provide services may encounter real difficulties in terms of conflict with Code requirements such as Right 4(5), 'co-operation among providers to ensure quality and continuity of services'. Right 6, the Right to be Fully Informed also represents a potentially significant point of conflict. Here consumers have the 'right to honest and accurate answers to questions relating to services', such as information about options available, costs, and how to obtain an opinion from another provider. Right 7(8) gives consumers the 'right to express a preference as to who will provide services and to have that preference met where practicable'.

Issues for Consumers

The Code deals with issues relating to the quality of service delivery. Right 4 of the Code requires all services to be provided 'in a manner consistent' with the consumer's needs, that 'minimises the potential harm to, and optimises the consumer's quality of life of, that consumer'. Right 4(3) requires a provider to take into account all the needs of a consumer when providing a service. Such needs must be considered holistically and include social, personal, cultural and spiritual needs. The Code recognises that a person's wellbeing necessarily involves his or her personal needs, values and beliefs.

So what are the issues for consumers when confronted with Managed Care models of health delivery?

• providers not addressing individual needs might result in consumers not being given sufficient information about their treatment options, including information about options not under the public funded health system, and their cost.
• introduction of managed care schemes might not guarantee some (the more disadvantaged) consumers a choice of health provider, a say in their treatment decisions, and other rights currently guaranteed under the Code.
• the possibility of power imbalances occurring between consumers and providers.

In my view the emphasis of any health system should be on equitable provision of services, rather than providing services equally across the country. There must be clearly defined criteria on which decisions are made about access to services. Any model which seeks to regulate this access should recognise the need for equity and consistency of application, and the decision making process should be based on openness and transparency

There are significant sectors of our population that are disadvantaged in socio-economic terms, and this is reflected in health statistics. Unless there is a commitment to equitable levels of funding, managed care will never prove a viable concept from a consumer's perspective. The barriers between providers and agencies must be broken down to ensure such a co-ordinated approach. A seamless delivery of health services depends on funders and providers working together towards provision of services which are consumer focused, whether those services are funded publicly or privately.

The Health and Disability Commissioner Act, as consumer-focused legislation, recognises the imbalance of knowledge and power between consumers and providers, and recognises that there must be a partnership between them. It is difficult to achieve such a partnership where consumers are unwell or vulnerable. It is for this very reason that the new law was initiated - partnership only begins to be possible where the inherent imbalance between providers and consumers is redressed. In the case of 'managed care', 'co-ordinated care', 'integrated care', the essential aspect is co-operation and teamwork. Right 4(5) of the Code delivers this.

5. Conclusion

The Code of Rights as consumer legislation redefines the boundaries for development of a managed care/integrated care model of health delivery. The overall purpose of the Act under which I function is the promotion and protection of the rights of consumers. This includes the right of all consumers to safe, quality services, regardless of the delivery model used.

True consumer empowerment means being fully included in the health care decision making process. However community schemes and involvement in care decisions should not be seen as allowing providers to stereotype the needs of consumers. One of the underlying objectives of the Code is that consumers should be treated as individuals, unique in their own particular circumstance, their own requirement level of informed consent, their concerns, their health objectives and their own health or disability needs. Managed care will only be successful from a consumer's (and Code) point of view if there is:

• true consumer focus and choice
• full information available
• appropriate standards in place
• consumer involvement in debate regarding service purchasing
• full and transparent accountability

In any event, managed or integrated care should never be seen as an excuse for providers not to take a consistently holistic approach to assessing the health or disability needs of individual consumers. Improvement in the quality of health and disability services will only come about when providers take active steps to co-operate and co-ordinate services among themselves. Whether ideologically driven managed care models of service delivery are ultimately capable of co-existing with Code of Rights requirements is a development I will view with considerable interest.